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Thursday, Oppenheimer assumed coverage on Akamai Technologies (NASDAQ:AKAM), issuing an Outperform rating with a new price target of $100. The firm’s analysis indicates a favorable outlook for the company’s growth, particularly in its Security and Compute portfolio. With a market capitalization of $12.4 billion and current trading price of $82.41, InvestingPro analysis suggests the stock is currently undervalued, presenting a potential opportunity for investors.
The coverage, taken over by Oppenheimer analyst Param Singh, reflects a positive stance on Akamai’s potential to surpass market expectations in the upcoming year. This optimism comes despite recent industry consolidation concerns that could impact Content Delivery Network (CDN) pricing structures. According to InvestingPro data, the company maintains healthy financials with a 59.4% gross profit margin and 4.7% revenue growth in the last twelve months, though 15 analysts have recently revised their earnings expectations downward.
Oppenheimer’s confidence in Akamai is bolstered by the belief that the company’s financial estimates are now more realistic following a previous earnings shortfall. Singh suggests that these adjusted expectations position Akamai favorably for future performance.
The price target set by Oppenheimer is derived from a 14 times price-to-earnings (P/E) ratio applied to their calendar year 2026 earnings per share (EPS) projection of $6.91. This target also takes into account the recent trend of multiple compressions within the industry.
Oppenheimer’s coverage of Akamai Technologies with an Outperform rating and a $100 price target underscores a belief in the company’s ability to leverage its Security and Compute offerings to drive significant growth, despite broader industry pricing challenges.
In other recent news, Akamai Technologies has seen several key developments. S&P Global Ratings revised Akamai’s outlook to negative, citing increased leverage, though the company’s ’BBB+’ rating remains affirmed. This change is due to Akamai’s leverage rising to 1.8x at the end of 2024, driven by higher debt levels and significant capital expenditures. In contrast, Guggenheim reaffirmed its Buy rating on Akamai with a price target of $133, expressing confidence in the company’s growth strategy and potential in the Security and Cloud sectors. Additionally, Akamai’s CEO, F. Thomson Leighton, made a notable insider purchase of approximately $3 million worth of company stock, signaling confidence in the firm’s prospects. Meanwhile, Akamai board member Bill Wagner resigned to take on a CEO role at Semrush Holdings, with the company stating there were no disagreements leading to his departure. These developments reflect ongoing strategic and financial shifts within Akamai Technologies, as it continues to adapt and expand its market presence.
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